Seven out of 10 high school graduates choose college, observes Smart Shoppers, a report by College Summit and Bellwether Education Partners. Despite warnings of a degree glut, the college wage premium continues to rise. College-educated workers earned 80 percent more than high school-only workers in 2012.
Schools must do a better job identifying students — especially disadvantaged students — who aren’t reaching their potential, Smart Shoppers argue. ”Schools, colleges, nonprofits, and businesses need to do a better job of educating students about their options on which college they should attend, which degrees they should pursue, and how they should pay for it.”
About a quarter of the gap in college attendance between affluent and working-class students can’t be explained by academic performance, a new study concludes. The Sutton Trust, a British think tank, looked at college-going in the U.S., Britain and Australia.
The Education Department has launched a Financial Aid Toolkit to help counselors explain college aid to students and parents.
Seventy-one percent of last year’s college graduates were in debt with an average of $29,400 in student loans per borrower, reports the Project on College Debt. The debt load increased by 10.5 percent from the year before, according to Student Debt and the Class of 2012.
Graduates will have trouble paying back their loans: 18.3 percent of young college graduates are unemployed or working fewer hours than they wish. However, low earners can qualify for income-based repayment, which links repayment to earnings, and Pay As You Earn, which forgives unpaid debt in 20 years rather than 25.
Nearly three-quarters of Americans worry about college costs, according to a Bellevue University survey. Fifty-five percent said they’d pursue a degree if it wouldn’t put them into debt; 40 percent said obtaining more education is worth taking on more debt.
In another survey, 42 percent of young people blame colleges and universities for rising student debt and 30 percent blame the federal government.
Young people are told they must earn a bachelor’s degree to get a good job, says Mike Rowe, who hosted Dirty Jobs. That’s not necessarily so.
It was “the worst advice in the history of the world,” Rowe says. “Skilled trades are in demand.”
He’s created a new poster that advises: “Work smart AND hard.” In Rowe’s version, the college graduate looks glum, while the worker is smiling.
On his Profoundly Disconnected web site, Rowe challenges the idea that college is right for everyone. His foundation gives trade school scholarships to students who show a strong work ethic and financial need.
Applicants must sign the S.W.E.A.T. Pledge (Skills & Work Ethic Aren’t Taboo), notes Cost of College.
This includes the statement: “I believe that all people are created equal. I also believe that all people make choices. Some choose to be lazy. Some choose to to sleep in. I choose to work my butt off.”
Collegebound students must dream the affordable dream, writes Michael Alcorn in the Arvada (Colorado) News. A music and fitness instructor, he’s the father of three children, including a daughter in 12th grade who wants to study nursing.
Me, the “life coach” parent, wants her to dream as big as the sky and the stars. . . .
Me, the “teacher” parent, really believes in education and higher education and the value of learning for learning’s sake . . .
But me, the “financial advisor” parent, looks at the average of $26,000 student loan debt for graduates, looks at one in three college graduates living in their parents’ basements, looks at 45-percent dropout rates and 40-percent graduate underemployment . . . This part of me loves the idea of two years of community college to get the general ed. out of the way, transferring all those credits to the great, local private university with the great nursing program, and finding a way to get her into life without crippling debt.
Only 20 percent of jobs require bachelor’s degrees, according to the Department of Labor, writes Alcorn. About 30 percent of adults are college graduates. “One hundred percent of high school students in any suburban school are told . . . they’re a failure if they don’t go to college.”
The three parents in his head keep arguing, but the one who says “debt be damned!” probably isn’t going to win, he concludes.
Without federal student aid — loans, Pell Grants, tax credits — higher education would cost less and be less elitist, said economist Richard Vedder in a Nov. 15 speech in San Diego. While fewer people would enroll in college, those who do would be more likely to earn a degree and less likely to end up as sales clerks and bartenders. Colleges would hire fewer administrators.
Vedder recommends seven steps he thinks are “politically feasible.”
First, return the program to its roots: helping poor persons attend college. Right now, over 17 percent of students from families with incomes from $60,000 to $80,000 a year get Pell Grants—these individuals have above median incomes. Over a few years we should tighten eligibility significantly, reducing the number of Pell recipients by perhaps 50 percent. Similarly, PLUS loans to parents of high income kids should end. Tuition tax credits benefit families whose kids would go to college in the absence of the credit, mostly from above average incomes. Go to a single grant program and a single loan program.
Second, impose academic performance standards to continue receiving grants. Reward students who graduate in less than four years, and cut off aid for, say, students who are in their sixth year of full-time attendance.
Third, he’d get the federal government out of student loans and let private lenders “strengthen the tie between interest rates charged students and market rates.”
Fourth, make participating colleges have some skin in the game. If colleges accept students and promise them Pell grants or guaranteed loans, make them share in the burden of high levels of defaults on loans, or the failure associated with Pell recipients not graduating. This would lead to a needed reduction in lending to persons who lack the aptitude, background, or discipline for college level learning.
Fifth, he’d gear federal aid to the cost of a basic college education from a relatively low cost state university. Increases would be linked to the inflation rate to discourage colleges from raising tuition to capture increased aid.
In step six, Pell Grants would become a voucher for very low-income students tied to academic progress. “Top students could be paid extra for superior academic performance,” Vedder suggests.
Finally, he’d “encourage private investors to begin human capital equity funds.” Investors would pay college costs in return for a portion of the graduate’s future earnings for a set time period, Vedder writes. “A graduate from M.I.T. majoring in electrical engineering might have to pay 8 percent of his income for 12 years, while a graduate in anthropology from Central Michigan University might have to pay 15 percent for 20 years.” These market signals would be useful for students.
Directing aid to low-income students — and away from the middle class — doesn’t sound all that politically feasible to me. Setting performance standards also would generate a lot of resistance.
Gainful employment regulations aim to ensure that career programs don’t leave students jobless and in debt, writes the New America Foundation’s Ben Miller in Improving Gainful Employment. The Obama administration’s new proposal is simpler and stronger than the one invalidated by a judge in 2012, he writes. But it still has loopholes.
In addition to measuring students’ debt-to-earnings ratio, Miller suggests three performance tests. Students would have to pay down their loans, no more than a third of students could withdraw in a year and the average graduate would have to earn at least as much as a full-time minimum-wage worker.
Career programs that can’t meet these standards — or have graduates with too much debt compared to their incomes — would risk losing eligibility for federal student aid.
Career programs need to focus on all their students — dropouts as well as graduates — Miller argues.
Furthermore, it’s not enough for programs to show low student debt if students also have low earnings, he writes: “Students are also spending billions in federal grant aid and arguably an even more precious resource, their time. They should expect better than living in or near poverty after completing a postsecondary program.”
Community college students typically don’t borrow — or don’t borrow very much — to pursue a vocational credential. But some don’t earn much either. Community colleges also have high dropout rates.
Gainful employment rules will hit high-cost for-profit colleges the hardest, but they also apply to nonprofit colleges that provide job training.
The “overeducated American” is a “myth,” states a new College Summit report. Workplace demand for college graduates is rising, according to Smart Shoppers: The End of the ‘College for All’ Debate? College graduates earn 80 percent more than high school graduates, the report estimates. Even in jobs that don’t require a degree, more-educated workers earn significantly more.
However, returns on the college investment have been exaggerated, concludes another new report, which focuses on higher education in California. The Economics of B.A. Ambivalence notes that most students take more than four years to complete a bachelor’s degree. In addition, some earn much less than others.
When the California Master Plan for Higher Education was enacted, in 1960, only 10 percent of Californians had a college degree, and the earnings gap between degree holders and non-degree holders was 35 percent. In 2010, they say, that earnings premium was 43 percent—higher than in the past, but still half the figure cited in the College Summit report. But, the researchers point out, the wage gap is higher now not because wages for college-degree holders have gone up, but because wages for people with only a high-school degree have gone down.
Graduating with burdensome debt is a higher risk, the researchers write.
College remains a good investment for the average California student and for American society. Nevertheless, it is true that more graduates now run the risk of not earning enough to make their investment in college worthwhile. This reality explains why many families of ordinary means are increasingly skeptical about paying for college.
“College is a ‘steppingstone’ to the middle class—not a ticket,” the authors warn. “It deserves the scrutiny an individual would give to any risky investment.”
They recommend better advising and more loan-repayment options.
Adults who’ve left school without a degree ask: Is College Worth It for Me? But few look at graduation and default rates when they choose a postsecondary option, reports Public Agenda. And many don’t understand that for-profit higher education will be more expensive.
While whites are skeptical about a college degree’s value, Latinos and blacks believe higher education is essential, writes Ronald Brownstein. The divergence shows up in a new College Board/National Journal Next America Poll.
Jason Parkinson, a 29-year-old electrician from Cleveland, doesn’t consider it much of a handicap that he never obtained a four-year college degree after high school. “It doesn’t do any good anymore,” he says. “You get a four-year degree, you work at a fast-food restaurant. You can go to trades and manufacturing…. I’m not big on going to college for a career that might not even be there in 10 years.”
Jose Stathas, a 47-year-old assistant to the owner at a pottery company in Buena Park, Calif., didn’t finish college either, but he believes he would be better off if he had. “I don’t have a four-year degree, and I’ve learned the hard way that it can affect how much you make,” he says. “It gives you opportunities to get jobs in the competitive marketplace we have now.”
Parkinson is white. Stathas is Hispanic.
“While minorities worry more than whites about affording the cost of higher education, they are more likely to see a payoff from the investment,” writes Brownstein.
Most Latinos, blacks and Asian-Americans said “young people today need a four-year college degree in order to be successful.” Slightly fewer than half of whites agreed.
Minorities were also far more likely than whites to say the economy would benefit if the United States meets President Obama’s goal of increasing by half the share of Americans with postsecondary degrees through 2020. “The higher the education mark, the more competitive we’re going to be in the world economy,” Stathas said. “There’s a lot of talk of the rise and fall of the U.S. Unless we step it up a notch, there are going to be parts of the world that eat our lunch.”
Minorities are more likely than whites to support spending more to improve the availability and affordability of higher education. ”Whites and Asians were far more likely than Hispanics and African-Americans to argue that the best way to control mounting student-loan debt is for colleges to hold down costs, rather than for government to provide greater financial assistance,” Brownstein reports.
Corinthian Colleges lied to students and investors about its job placement rate, according to a lawsuit filed by California Attorney General Kamala Harris. The company “targeted some of our state’s most particularly vulnerable people — including low-income, single mothers and veterans returning from combat,” Harris charged.
Corinthian is one of the largest for-profit college operators in California, notes the Bay Area News Group.
Two of Corinthian’s schools — Everest College campuses in Hayward and San Francisco — went so far as to pay a temporary agency to hire graduates for two days to boost job placement numbers, the suit alleges. Others double-counted gainfully employed grads or fabricated them altogether, it says.
. . . Corinthian responded in a statement that it was proud of the education at its colleges and that it has “robust processes in place to correctly record and disclose the job placement information we receive from our graduates and their employers.
According to the lawsuit, the Department of Justice discovered internal documents in which Corinthian describes its target demographic as “isolated,” “impatient” individuals with “low self-esteem” who have “few people in their lives who care about them” and who are “stuck” and “unable to see and plan well for the future.”
Vada Pinson earned an associate degree in business administration at Heald College in Hayward. He’s still trying to pay off $30,000 in loans, he told the Bay Area News Group. The degree didn’t help, Pinson says. Heald promised to help him find a job but didn’t call with a single job referral.
President Obama’s plan to rate colleges is “yet another mistaken attempt . . . to alleviate some of the symptoms of a problem without actually addressing the underlying disease,” writes Erika Johnsen. The other part of the plan – promoting income-based repayment – will make the disease worse.
The “easy, cheap and indiscriminate availability of student loans ” juices demand and helps universities raise their prices, writes Johnsen. The Obama administration keeps sending out “signals about how ‘easy’ it will be to repay these huge loans after you graduate with a little help from Your Friend, The Federal Government.”